ABSTRACT: We discuss the current structure of card networks that facilitate
transactions between merchants and consumers. We find that presently
fees for this intermediation are considerably higher than costs. This
is facilitated by rules imposed by the card networks on the merchants
that do not allow merchants to steer competition to cards that have
lower fees. It has also been facilitated by the requirement that a
merchant has to accept all cards of the same network (honor all cards
rule) - recently abolished in the US, as well as by the fact that the
networks set the maximum interface fee between issuing and acquiring
banks. We propose the abolition of anti-steering rules so that
merchants are able to pass on card holders the costs of the card they
use. This will facilitate inter- and intra-network competition and will
improve the competitiveness and efficiency of the market.